Helium Crises Explained

By Mark Zettler, President
Life O' the Party

There I was, sitting in a convention hall in Las Vegas at the
International Balloon Association (IBA) meetings this year. As
a former Vice-President and International Convention Director
of the association, I feel I have a vested interest in this group
as well as everything it stands for. I was pleasantly surprised
the room was pretty full. Well over 150 people were there at
the beginning of the meeting to hear an important discussion
about the helium problem in our world today.

Most unfortunately, by the end of this session, what was discussed
and disseminated to us were not the only issues making me very
uncomfortable. Just as serious as the facts given and issues
debated was another fact – there were less than ten people
left at the end of the meeting! To be sure, this was a very long
discussion. A number of people took the podium to speak. Many
questions were asked, debated and answered.

This meeting was linked to the International Halloween, Costume
and Party Show. Many in attendance had booths to man and because
of the length of discussions the time began to creep into show
floor time. So a number of audience members had to leave to be
in their booths. However, the seriousness of the issues being
discussed should really have trumped ANYBODY running off to their
booth or to walk the aisles of a trade show. If the helium problems
of supply and demand do not correct themselves, or if we do not
work with the gas in a more careful way, there won’t be
much of a balloon industry left to tend to.

All of these distributors and manufacturers running to their
booths to sell balloons and related materials and equipment missed
the forest for the trees. The same can be said for anyone else
who took off to walk the show.

IF HELIUM SUPPLIES DWINDLE WE WON’T BE ABLE TO
SELL MANY BALLOONS (OR RELATED SUPPLIES AND EQUIPMENT) BECAUSE
WE EITHER WON’T BE ABLE TO ACQUIRE OR WON’T BE
ABLE TO AFFORD THE GAS TO FILL BALLOONS!!

If there is no helium to use there will be no need to buy or
sell balloons!
If there is no helium to use there will be no equipment needed
to purchase!
If there is no helium to use there will be no need for ribbon
or tulle and hundreds of other items we need and use every day!

Helium is the “horse before the cart” of this industry.
Without the gas, we’ll be selling lots of lovely air-filled
creations to be sure. But, what gives this industry a real “lift” (and
no need to pardon my pun) is the fact that the gas gives our
product an other-worldly quality. Balloons floating skyward,
going against what our eyes and minds say should be happening
is what makes them so uniquely different than anything down here
on Earth. Balloons floating high above our heads as single items
purchased, as arrangements, in arches or columns, or used to
lift other items are what gives magic and wonder to our business.
This business of balloons would not be an industry without helium.

At this meeting, we received (and what too many people missed)
a whole lot of information. Some of it surprising, much of it
made perfect sense and some of it was downright upsetting.

If you need it in a nutshell, here it is:

The shortage has not been contrived.

Expect more price increase; as many as two or three a
year until perhaps 2012.

There is almost NOTHING we can do about this problem
but hang on for the ride.

The meeting hosted by The International Balloon Association
(IBA) brought together a number of manufacturers, distributors,
decorators, party store owners and others. The keynote speaker
of this meeting was Phil Kornbluth. Mr. Kornbluth is the Executive
Vice-President of Global Helium, Matheson Tri-Gas. His company
supplies bulk and specialty gases and gas handling equipment.
His company is one of only six companies in the world today that
refines and supplies helium.

Let me repeat that:His company is one of only six companies in the
whole world today that refines and supplies helium!

And here is something else startling – there
are only 15 sources of helium in the entire world! Ten of
those 15 are in the United States.

So, there are very few sources for helium and even less refiner/suppliers
of the gas. One little hiccup in the supply of helium at the
source, in refinement or in distribution and everything goes
haywire. In 2006, the United States Bureau of Land Management
started hiccupping and the whole world got indigestion. Mr. Kornbluth
called this the beginning of the “perfect storm” not
only for us, but for everyone on our planet that needs and uses
helium today.

The Bureau of Land Management (BLM) is THE major supplier of
crude helium to refiners in the United States, who market and
sell pure helium throughout the world. Managing the nation’s "federal
helium reserve" was a quiet federal program until 2006 when
temporary shortages made news around the world.

Mr. Kornbluth said the #1 cause of our shortage problem was
the BLM losing pressure in two of its three compressors in 2006.
This caused outages to supply the helium and the shortages began.
And because America supplies 75% of all the helium in the world
and the BLM holds most of the helium, pretty much every helium
supplier experienced tight supply,

2006 was just a real bad year for helium. Beside the BLM issues,
there were capacity utilization problems in both Algeria and
Qatar. This impacted 8% of the worldwide supply. Planned shutdowns
and unplanned outages occurred in four other plants as well.

2007 really wasn’t much better as price increases continued,
surcharges were employed by suppliers and almost every supplier
of the gas was put on “allocation” (i.e. they were
being rationed). Added to these issues was trouble at the huge
ExxonMobil plant throughout much of the year. First, production
was off 15% from April-September because of a CO2 removal problem.
Then in October their output was reduced by 50% while repairs
were being made to fix the initial problem.

This brings us to 2008. While supply shortages have eased somewhat,
there is still so much that could go wrong to create more troubles
for not only price increases but supply shortages as well.

TRUE or FALSE??

When a crisis of any kind occurs in our world today, there seems
to be a propensity to want to twist the facts to either make
a better story (in the media) or cause more of a stir. The very
same holds true when talking about helium and the predicament
we are in because of the short supply of this most necessary
gas for our industry. Here is a little quiz you can take to see
just how much you think you really know about helium in the world
today:

The world is going to run out of helium by 2015.FALSE

The U.S. government’s strategic stockpile will be largely
sold off by 2015. The world still has tremendous unexploited
helium reserves.

Helium price increases are the result of price gouging
by suppliers who are making excessive profits.FALSE

Despite the price increases, helium profitability is not much
different from other gases. Helium profitability has recovered
after a series of cost shocks and reduced margins earlier in
the decade.

Helium is the only gas on earth that is lighter
than air.FALSE

Helium is the second lightest element and second smallest molecule
behind only Hydrogen. This acronym 4H MEDIC ANNA will help you
remember all the lighter than air gases:

Many of the gases listed above are not practical for use in
balloons, but they have been used. The following combine poor
lift with objectionable properties: carbon monoxide, hydrogen
cyanide, hydrogen fluoride, diborane, ethylene and acetylene.
Nitrogen has negligible lift. Neon is harmless and offers a modest
degree of lift; however it costs roughly the same as helium,
another noble gas with far superior lift. The four remaining
gases (ammonia, methane, helium, and hydrogen) have been used
as balloon gases.

Ammonia has sometimes been used to fill weather
balloons. Due to its relatively high boiling point (compared
to helium and hydrogen), ammonia could potentially be refrigerated
and liquefied aboard an airship to reduce lift and add ballast
(and returned to a gas to add lift and reduce ballast).

Methane (the chief component of natural
gas) is sometimes used as a lift gas when hydrogen and
helium are not available. It has the advantage of not leaking
through balloon walls as rapidly as the small-moleculed hydrogen
and helium. (Most lighter-than-air balloons are made of aluminized
plastic that limits such leakage; hydrogen and helium leak
rapidly through latex balloons.).

Helium is used primarily for balloon sales.FALSE

Helium is a very, very strategic element and has many different
uses other than for balloons. 20% of the entire world’s
output of helium is used for MRI machines. These medical machines
you find in nearly every hospital in our world, and in special
MRI centers and doctors offices, use more helium than any other
single category of helium user on Earth today. And therein lays
a huge problem for the balloon industry. When the going gets
tough for helium distribution, the medical, military and high
tech fields will get first crack at the gas long before it is
distributed for party balloons or parades.

Balloons fall in the helium usage category of “Lifting,” along
with parade balloons, scientific and weather observation, the
military, DEA and border surveillance craft (e.g. Unmanned Aerial
Vehicles – UAV’s), blimps for advertising and TV
broadcasting, heavy lifting and automotive air bags. All of these
items together form the “Balloon/Lifting/Inflation category
for helium usage.

Surely all of these lifting items together use a
huge amount of the worldwide supply of helium?FALSE

The entire category of “Lifting” usage for helium
only uses 8% of the world’s supply of the gas. We are mightily
beaten by the previously mentioned MRI (20%); welding (17%) and
lab work (10%) categories.

Chemically speaking, helium’s most valuable
property is that it is a lighter than air gas.FALSE

Though it’s lighter than air quality is fairly unique
and very useful, today helium is used in many different applications
because of its other special qualities. These days, it is most
sought after because it can get so incredibly cold and not freeze.

Helium is:

Colorless, odorless, tasteless gas

Chemically and radiologically inert – helium is non-reactive
and does not become radioactive

Second lightest element and second smallest molecule

Helium has the lowest condensation point of any substance
(–452°F)

Helium remains liquid even at absolute zero (-459F/-273C)

Helium gas has very high specific heat and thermal conductivity

So what’s the up and coming product for helium
usage and who is using it? There is actually a clue in this
story. Find it if you can!

You won’t believe it when I tell you…it
is flat screen monitors, TV’s and LCD’s!!

Asian countries producing LCD panels of any kind use helium
in every single screen. Asia now accounts for 25% of all helium
usage in the world today primarily because of LCD technology.

So, the business of balloons commands only a very, very small
portion of the helium pie. Prices will unfortunately continue
to rise until probably 2012. True to what we were told, Life
O’ The Party has experienced two price increases so far
this year. The hope is there will be a leveling off of supply
and demand issues and the costs will stabilize by then.

Can we be sure? No, not any more sure than we can be of oil
and farming and insurance and housing prices and the mortgage
crisis and, and, and – it goes on and on for all of us.

However, we at Life O’ the Party are doing everything
we can to minimize your cost to bring you beautiful balloons
for décor and gift giving seven days a week.

Thank you very much for your patience, understanding and hopefully
appreciation for the global problem we face when providing balloons
for you, your family and friends.

If you have any further questions please do not hesitate to
contact me personally.